ANNA MA v. CHAN PANG YEN AND ANOTHER

IN THE LANDS TRIBUNAL OF HONG KONG

(Appellate Jurisdiction)

Landlord and Tenant Appeal No. 26 of 1984

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JUDGMENT

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1. This is an appeal under Section 60 of the Landlord and Tenant(Consolidation) Ordinance, Cap. 7 against a decision of review by the Commissioner of Rating and Valuation of a Certificate of Increase of Rent. The appeal is in respect of the reviewed rent for a room in the second floor flat of five storey premises at 38 Marble Road, North Point. The building was originally constructed as a factory in 1952 and later converted to domestic accommodation along with extensions to accommodate further flats. The first respondent until recently lived in the flat, letting out the subject room, which was formerly part of the kitchen and has been partitioned off, a cockloft built above the subject room, and one other room within the flat. The appellant complained that the subject room, being adjacent to the bathroom and toilet, was always damp, and with no window to the outside, the natural lighting and ventilation was poor. The height of the room is reduced from that of the rest of the flat by having the cockloft constructed above. As previously mentioned, the cockloft was let separately to other tenants. However, at the moment it is vacant. The current rent for the subject room is $218 per month inclusive of rates. This rent also covers the use of the telephone, electricity for the common areas and service charges. The internal floor area is 4.7 m².

2. Following an application pursuant to Section 57 by the first respondent for a certificate of increase of rent, the Commissioner of Rating and Valuation, the second respondent in this case, under Section 58, issued a certificate on the 10th April 1984, which certified an increase of $62 per month. This is the equivalent to the maximum statutory limit of 30% of the current rent.

3. Following the serving of the notice of increase in rent by the landlady, the tenant, Anna Ma applied for a review pursuant to Section 59. On the 23rd August 1984 the Commissioner issued a notice of decision varying the increase to $50 per month to take effect from the 1st June 1984.

4. From that notice of decision the appellant now appeals to this Tribunal on grounds similar to those submitted in respect of the Commissioner's review. That is she has referred mainly to the dampness and poor ventilation in her room but additionally has now given other reasons for the increase being excessive. She has cited suspect security due to the type of lock used in the front door, but more particularly she has produced an analysis of the rent passing for another room in the same flat. This rent is $910 per month for a room having an area of 8.48 m². It was renegotiated about November 1983 and includes rates as well as use of the telephone, common lighting and service charges. Her analysis of the rent led her to submit that the prevailing market rent for her room should be $250 per month and the increase should be $16 per month.

5. She also said in evidence that part of the flat formerly occupied by the landlady had been let recently for $1,200 per month. The first respondent's daughter-in-law, Chan Yuk Chun, gave evidence of having arranged this tenancy which was to her friend at a rent below that which would have normally been asked. She said this was because, in return, her friend would be looking after the place, collecting and forwarding mail, paying the electricity and service charges as well as collecting the rents from the other tenants. The friend had applied for public housing and is expected only to be there temporarily.

6. The appellant's calculations leading to her proposal of the 'proper' increase in rent, as well as her analysis of the rent for the 'back' room of $910, have neglected to take account of the statutory provision that the calculation must be based on a current rent and prevailing market rent which are both exclusive of rates. That aside, she has allowed adjustments to a base of $107.31 per m², of -10% for poor light and ventilation, -20% for a lower ceiling height, -10% for lack of privacy due to the thin partition, and -10% due to the proximity of the kitchen on the other side of the internal and only window in her room.

7. The Commissioner appears to have listed the same rent as part of his submission attached to the affidavit sworn by Mr. P.K. Yuen who also appeared before the Tribunal in this case. He is a Senior Rating and Valuation Surveyor in the Rating and Valuation Department. The Commissioner's analysis gives a unit rate of $101.28 per m² exclusive of rates. Evidence was led that this rent was renegotiated by the sitting tenant and was in fact a 30% increase on the previous rent.

8. The Commissioner's assessment of the prevailing market rent, as at 10th April 1984, was originally $335 per morth exclusive of rates but inclusive of the telephone, common area lighting and service charges. The allowable increase is statutorily limited to half the difference between the prevailing market rent and the current rent (both to be exclusive of rates ), or 30% of the current rent, whichever is the lesser amount. Based on a prevailing market rent of $335 per month and an adjusted current rent of $209.22 after allowing for an apportionment of the rates, in accordance with the statutory provisions, the Commissioner's original calculations gave, one half of the difference of these two rents as $62.89. The alternative of 30% of the adjusted current rent was calculated at $62.77. Rather exceptionally the result was the same and the increase was certified as $62 after the number of cents were disregarded.

9. On review the Commissioner reduced his assessment of the prevailing market rent after having taken account of the appellant's submission concerning the state of the premises supported by a further detailed inspection. The revised assessment as at 10th April 1984 was $310 per month which led to a reviewed increase of $50.

10. I have carefully considered the oral evidence as well as that contained in the Commissioner's affidavit. I have noted particularly the allowances made in relation to the disadvantages associated with these premises and also the evidence of the letting of bed spaces in similar buildings. Bed spaces seem to be let somewhere in the region of $250 per month. I consider that the prevailing market rent should be assessed at $300 per month exclusive of rates but inclusive of the use of the telephone, the common lighting and service charges. In arriving at this conclusion I have reduced the apportionment for telephone, lighting and service charges from the $15 as allowed by the Commissioner to $10 which I consider to be more appropriate.

11. With respect to the current rent of $218, I have apportioned the rates on the basis of the rateable value ascribed to the subject room being $720 or equivalent to $60 per month. Hence I make a rates deduction of $8 per month to give an adjusted current rent of $210 per month exclusive of rates. Half the difference of these amounts gives an allowable increase of $45. This is less than 30% of the current rent which now calculates at $63.

12. May I mention at this stage that in any valuation exercise, it is usually preferable to round off any assessed amounts to the nearest tens or hundreds etc. of dollars as may be appropriate to the magnitude of the amount. In such an assessment, as this involving apportionments, the use of cents will, in most instances, give only an illusion of accuracy and should be avoided.

13. I therefore determine that the increase in rent at $45 with effect from 1st June 1984.

14. There will be no order as to costs.

15. DATED this 7th day of November, 1984.